JONATHAN CHAIT AUGUST 4, 2011
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The battles lines are forming over the supercommittee, tasked with finding $1.8 trillion in deficit reduction or triggering huge cuts to defense and health care. The divide isn't exactly that Republicans won't agree to higher revenue and Democrats won't agree to cut entitlements. It's that Democrats will agree to cut entitlements only in exchange for higher revenue, and Republicans won't agree to higher revenue no matter what. Liberals are disappointed in the refusal of Democratic leaders to draw clear lines in the sand, but I don't see any scenario in which Democrats cross the line Obama refused to cross when negotiating with Republicans: either entitlements for taxes, or nothing for nothing.
So, if Republicans refuse to take the deal, what happens next? Well, the Obama administration hopes that the trigger forces them to act. Republicans can't abide the severe defense cuts that the trigger would provoke. It's possibly this threat will force Republicans to bargain. But the more likely scenario is that they let the trigger go off, and then quickly undo it. National Review's editorial, I think points the way for the GOP strategy:
Republicans should make public a serious first step toward entitlement reform without blinking on tax increases.
But the supercommittee is almost guaranteed to fail in agreeing to any large deficit reduction, for the same reasons that months of wrangling did not lead to a grand bargain: The parties’ positions are too far apart. We should assume, then, that the automatic cuts are likely to become law.
That does not mean that they will happen. Future Congresses will have their say, and it is hard to believe that they will accept a ten-year budget path set now. This bill will, however, establish the default settings for federal spending. Liberals who want more domestic discretionary spending will have to get legislation through both chambers of Congress and past the president’s desk. So too for conservatives who want to restore defense spending.
If the automatic cuts become law, restoring defense spending is exactly what we hope Republicans try to do.
That's the answer, I think. Now, you could say that this would make the supercommittee a failure. From the perspective of deficit reduction, you'd be correct. But the supercommittee wasn't really created in order to reduce the deficit. It was created in order to lift the debt ceiling.
Republicans needed a way to approve the debt ceiling without backing down from their avowed goal of reducing the deficit by a dollar for every dollar they hiked the debt ceiling. The supercommittee was supposed to lock in the lion's share of that deficit reduction. Now, suppose the parties can't agree on a fiscal adjustment -- that is, Democrats insist on a balanced deal and Republicans insist on a cuts-only deal. Then we trigger some painful cuts neither party wants, and Congress then goes ahead and cancels them out. End result: we increased the debt ceiling by $2.4 trillion, and only cut half as much from the budget. By the time this is clear, conservatives have long since turned their attention to other matters, and Boehner gets to keep his Speakership.
Meanwhile the ratings agencies think we've taken a step toward constraining the long-term deficit, and we actually impose a solution in 2013 when the Bush tax cuts face renewal, which also happens to be the sensible time to do the fiscal adjustment. That sounds like a win to me.
15 comments
I'm watching the tug of war on public opinion outside the Supercommittee. After ACA we saw it in town hall meetings and after the Ryan plan we saw it in town hall meetings. Like before, the victims claim they are unfairly represented and I predict that the Republicans will complain the loudest because they have been strutting about beating their chests over what they accomplished. By the way, I love the cartoons. Keep doing it.
- Nusholtz
August 4, 2011 at 2:24pm
Yes, good, this does sound like a realistic non-disasterous outcome of the Super-Committee. After all, Obama's committee, and the Gang-of-Six, and the entire House and Senate, all met and were unable to come up with an agreement the Republicans would accept -- why should this committee be any different? So we got our debt-ceiling raised, mission accomplished. And we'll fix any disaster down the road in spending bills -- which is what we were going to have to do anyway. Besides, we're all going to be much more worried about yet another "Government Shutdown" hostage crisis in 30 days, than we are about the debt-ceiling.
- AllanL5
August 4, 2011 at 2:49pm
This is indeed a win but the Cassandras and left ideologues out here will find ways to turn it into a loss.
- liberalref
August 4, 2011 at 3:02pm
So O'bama wins by losing! Again! Do you think that analysis was all a part of the master plan? Actually, I'll throw that question out to the floor as I think I've more chance of playing for Dublin thnt I do Chait responding to that question.
- IggyPop
August 4, 2011 at 3:10pm
Pollyanna checking in here... One possibility is that this really WILL succeed by failing, and succeed in a really big way. We have an entitlement system, Medicare included, that is clearly unsustainable over the long term. We also have a Defense Department that is spending huge amounts of money on combatting cold war ghosts. Both of these programs are sacred cows, and maybe, just maybe, this will offer a way of hacking into them a bit while pushing the blame off on others. It's cynical, for sure, but it might work.
- gwcross
August 4, 2011 at 3:18pm
Except the ACA is the way to control medical costs going into the future -- if only the Republicans would quit screwing with it. Privatization has clearly failed in controlling medical costs, while Government control has succeeded in this area. If you're not allowed to raise taxes (thank you for nothing, Grover Norquist) then there's no way to provide the level of social services we've found helpful, useful, and even necessary since the Great Depression. We had a great economy with a balanced budget under the Clinton tax-rates, despite wails of doom from the Republicans in 1994. And we can have that economy again -- but again, we'll have to be able to ignore more Republican wails of doom to achieve that.
- AllanL5
August 4, 2011 at 3:49pm
Great article. How to succeed by failing. Like Napoleon at Moscow, the Wehrmacht at Stalingrad, the Italians in Libya, the French at Dien Bien Phu. I await the posts giving those spins. And by a 5 cornered bank shot to win, no less. In comparison, my suggestion is much more complicated. Pray for an economic crisis sooner than later so that Progressive candidates are encouraged to challenge Repubs, Dem Blue-Dog-types and BHO asap. That way, Dems in many districts get chance to vote for a Dem on the ballot in 2012. Have any of you ever noticed that Progressive positions are generally popular with the general voter?
- drofnats1
August 4, 2011 at 4:17pm
- A powerful new group of professional politicians threatened to not increase the debt limit unless Obama and Democrats reduced the debt. People are distracted by the Anthony trial till the final weeks of the crisis but the economic extortion ends. The dead-enders cave before their Summer Vacation and say "Keep borrowing and don't come back for a higher limit rematch until 2013". So, what was the ransom and why is the debt ceiling safe till the Spring after next? A. $1Trilion got cut from future spending before they left on vacation (but 99% of that cutting is after '13). B. They'll have an S&M Congressional Committee, or else. They are digging in to not agree to any plan or may flinch and agree to a plan that can't pass the full rosters who will be headed on Christmas Vacation. The penalty is automatic cuts which they don't take seriously, or mistakenly believe will be implemented by people who won't. Is this as good-bad for each side as Carter-Iran '78-'79? Well the liberal base is jolted into panic and seeking a new pair to run next Fall or failing that many aim to punish President Obama with an electoral boycott. The GOP is booking rooms in DC for a January 2013 Inauguration based on a To Be Announced nominee. Me? I'm wagering Scary Economy II will have to be addressed by the GOP but they won't be able to wait until it's an Obama's Fault election slogan. I could be wrong and they might hand the next year over to the Tea Party for more disaster making, and blame them. Being Elected Means Being Invested (for bumper sticker use only)
- michaelg
August 4, 2011 at 4:38pm
- drofnats1's dilemma: "Have any of you ever noticed that Progressive positions are generally popular with the general voter?" I solved it. An Amendment (or State Of Emergency) that removes names from the ballot, people vote for positions.
- michaelg
August 4, 2011 at 4:49pm
Leave us not forget, michael, that if Obama were not either too thoughtless or too clever by half to require the debt ceiling increase as part of the Bush tax cut deal, this never would have happened. And we were only saved from much worse because the Republicans wouldn't say yes.
- roidubouloi
August 4, 2011 at 6:16pm
Roi, you gotta be kidding right? You mean to tell me the Bush tax cut deal was, and would have been the only opportunity for Republicans to obstruct? Now who's being too clever by half?
- wkwami
August 4, 2011 at 7:11pm
I am probably off base here, but could a creative solution be entitlement cuts for short-term stimulus spending? Probably not possible due to the parameters set for the committee but as an actual bargain, it should work, no? Of course, chances are the stimulus won't be effective in time for the 2012 election...
- Hobbes
August 4, 2011 at 8:52pm
They can obstruct plenty, wkwami, but the debt ceiling presented a unique opportunity for extortion. Plenty of people, at TNR alone, pointed out that he was nuts not to insist that the debt ceiling be lifted as part of the deal on tax cuts. The guy stinks as a negotiator. He gives away the store and then declares victory (or maybe that he is the only grown up in the room which he seems to consider the same thing).
- roidubouloi
August 4, 2011 at 10:51pm
Exchanging short term stimulus for long-term cuts won't cause harm to the economy and it's precisely the mix of policy needed.
- Hobbes
August 4, 2011 at 10:55pm
- There is largely one answer to why the GOP is able to stonewall Obama: Because they can by exploiting dynamics beyond White House control. Why do people choose to omit Congress from the Obama Policy equation? It doesn't take a scholar to explain the power of 40 Senators. From day one, Kennedy and Byrd were mostly missing, Franken wasn't seated till mid '09 and Lieberman was not reliable. And I believe roid knows the weak link in the Obama agenda from stimulus to healthcare, a majority of appointments and hundreds of bills that sailed out of the House only to die in the Senate (before they lost the House) can't be blamed on an inept WH. No one claims the lame-duck could be dictated by President Obama or the majority when they depended upon the good will of a few Senate Republicans only after McConnell had his way. Please look at the roll calls for Civil Rights, Voting Rights and Medicare and explain LBJ's success without Republican votes. Citing national polling data for progressive policies doesn't match the reality that is the composition of the Senate. It requires the fiction of alternative history for liberals to explain how Obama should have only accepted clean debt bill and fault him for not negotiating a more favorable deal. That's a double fantasy which requires two sets of counterfactuals.
- michaelg
August 5, 2011 at 9:59am